Stock futures drop as earnings spark global slowdown worry

NEW YORK – U.S. stock index futures fell on Tuesday on concerns the slow global economy will continue to dent corporate revenues, with a trio of Dow components appearing to confirm investor worries.

United Technologies Corp reported a 3.3 percent decline in third-quarter earnings and cut its sales forecast for the year, citing weak demand from airlines and an uncertain economy.

Fellow Dow component DuPont reported a lower-than-expected quarterly profit on Tuesday and announced 1,500 job cuts as part of a cost savings program designed to offset falling sales around the world. Its shares dropped 5.4 percent to $47.10 in premarket trade.

3M Co fell 2.7 percent to $90 in premarket trade after the diversified U.S. manufacturer reported a 6.7 percent rise in third-quarter profit, but the company cut its profit forecast for the full year as acquisition costs and a strengthening dollar hurt margins.

"It was ever so modest and ever so subtle but there was a shift to the markets really starting to trade on U.S. economic and U.S. company fundamentals and the market didn't seem to care much about what central banks were doing or what was going on in Europe," said Keith Bliss, senior vice-president at Cuttone & Co in New York.

"Then all of a sudden - wham - we get weaker earnings this quarter and it refocuses everybody's attention on the global economy."

Adding to the global economic concerns was a fall in Spanish bond prices after Moody's downgraded five of the country's regions including economically important but deeply indebted Catalonia.

S&P 500 futures fell 16.1 points and were well below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures dropped 112 points, and Nasdaq 100 futures declined 25 points.

According to Thomson Reuters data, 33 S&P 500 companies are scheduled to post earnings on Tuesday. Of the 123 S&P 500 companies that have reported earnings through Monday morning, 60.2 percent have topped analysts' expectations, shy of the 62 percent average since 1994 and below the 67 percent average over the past four quarters.

Earnings are expected to fall 2.4 percent in the third quarter from a year ago. Even more disconcerting to investors, top-line expectations have been more discouraging, with 61 percent of companies having missed revenue expectations.

Apple Inc shed 0.6 percent to $630.01 in premarket trade. The company is expected to make its biggest product move on Tuesday since the iPad's debut two years ago, launching a smaller, cheaper tablet into a market staked out by Amazon.com Inc and Google Inc .

Whirlpool Corp advanced 2 percent to $88 after reporting a higher-than-expected quarterly profit, helped by price increases and tight cost controls, and the world's largest appliance maker raised its earnings outlook for the year.

RadioShack Corp tumbled 15.5 percent to $2.02 in premarket after the consumer electronics chain reported a much wider-than-expected quarterly loss, hurt by weak margins in its smartphone business.

The U.S. Federal Reserve's policy committee is also set to begin the first day of a two-day meeting on interest rate policy on Tuesday. The Federal Open Market Committee is likely to hold off from taking fresh steps at the meeting, opting to review the impact of the significant action it took last month and keep a low profile in its last gathering before the November 6 general election.

European stocks fell broadly as third quarter results presented a mixed picture, hitting a one-week low that analysts said might encourage some investors back into the market.

Asian shares were lackluster with the corporate reporting season getting underway in the region, as investors stayed cautious after global shares faltered overnight on weak earnings reports and outlooks.